When the seller's power exceeds the buyer's power in the foreign exchange market, the rising momentum of the price is blocked, forming a wave of peaks, called resistance level. When the buyer's strength is greater than the seller's strength, the price is supported, rebounds upward, and forms a trough, which is called the support level. In the rising market, the previous highest price often becomes a resistance level. In a falling market, the previous lowest price often becomes the support level.

Generally speaking, as long as the price fails to effectively break through the resistance level or support level, the more times it is touched, the more effective and important these resistance levels or support levels are. Once the price trend breaks through, these resistance levels or support levels will exchange roles, and the original resistance level will become support level, and the original support level will become resistance level. When the price falls below the support level and cannot return to the support level, the support level becomes a resistance level and enters another trend. On the other hand, if the price breaks through the resistance level upwards and can keep the price rising above this level, the resistance level will become a support level and enter a new market trend.